An in-depth analysis of the influence of cross-ownership structures on the elevation of environmental, social, and governance (ESG) performance among U.S. corporations

Abstract

This study examines the impact of cross-ownership on the Environmental, Social, and Governance (ESG) performance of corporations in the U.S. market. Using the Ordinary Least Squares (OLS) regression models with year-fixed effect as well as industry-fixed effects, and data from 22 industries spanning 2013-2023, the research explores how cross-ownership structures influence sustainability outcomes. The findings demonstrate that cross-ownership positively influences ESG performance, with significant improvements observed across all three dimensions (Environmental, Social, and Governance). Specifically, cross-ownership enhances governance practices, promotes social responsibility, and supports environmentally sustainable initiatives. Companies with cross-ownership structures achieve higher ESG scores, and the magnitude of this impact increases with the number of cross-owners and their shareholding proportions. Firm-specific factors, such as size and age, also positively contribute to ESG performance, while profitability remains statistically insignificant. By integrating cross-ownership dynamics into the ESG framework, this study offers new insights into how ownership structures can drive sustainability outcomes. The results provide valuable guidance for policymakers and business leaders to align corporate governance strategies with sustainability objectives, fostering long-term value creation and resilience